Solid Foundations - The Daily Gwei #503
Where you build matters.
When a new skyscraper is being built, one of the most important things to get right is the foundation of the whole thing. If the foundation is, for any reason, unsound or fragile - it risks bringing down the whole building. The same isn’t true for any particular level on the building - for example, level 40 of the building could be completely destroyed in a fire and it’d have little effect on the overall building (it may spread to some other levels before being put out, though). The same dynamic is just as true for crypto-networks and it’s why building robust networks is so critical.
There is actually an example we can look at here for what a frail and centralized protocol that collapsed looked like - of course, I’m talking about Terra. The foundations of Terra were so fragile due to the nature of UST that the collapse of the stablecoin took down the entire Terra ecosystem with it (along with the Terra blockchain itself). This meant that any project that had built on Terra or heavily integrated with UST collapsed and had to find a new home if they wanted to continue existing. It also didn’t matter how decentralized any of these applications were - they were all the mercy of the centralized Terra chain itself.
Now let’s take Ethereum - its solid foundations are like what antiprosynthesis outlined above - the core protocol code is robust, the network itself is decentralized, and there isn’t really anything that could be built on the application layer that could take down the network via centralization (certainly not something like UST). Though this isn’t to say that in the future something couldn’t threaten the network from the app layer, but Ethereum is built in such a way that it can resist and recover from things like this - it’s one of the main reasons why we haven’t compromised even a little on layer 1 decentralization.
We can also look at Ethereum’s application layer where there have been plenty of projects over the years that have either outright collapsed or just zombiefied due to not finding product/market fit. Obviously this is expected to happen but it has absolutely no bearing on the Ethereum protocol itself - a million projects could fail and the Ethereum network would still keep producing blocks through it all. Again, this is due to Ethereum’s solid foundations and commitment to keeping the protocol layer and application layer separate.
All of this doesn’t just stop at applications - it also applies to everything built around an ecosystem like Ethereum. Layer 2 protocols, centralized exchange/service integrations, middleware protocol integrations or just users simply holding assets on Ethereum and trusting that it won’t collapse. The best bit is all of this is transparent - Ethereum’s code is open source and anyone can run a full node on their own hardware - all of this comes together nicely to make Ethereum a solid foundation to build on.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.